Fitter, leaner, faster: China sets hard targets in ‘weight loss’ plan for bloated state firms
Goals include specific cuts to capacity and layers of management
Beijing on Wednesday unveiled hard targets as part of a “weight loss” plan to downsize the bloated state sector.
Coal and steel capacity would be cut by 10 per cent this year and in 2017, according to a statement released after a regular State Council meeting chaired by Premier Li Keqiang.
The government also aims to reduce the number of offshoots of the country’s biggest state enterprises by 20 per cent, as well as cut costs and boost profitability at the firms by a combined 100 billion yuan (HK$119 billion) over the next two years, it said.
The decision came after People’s Daily last week published an interview questioning the sustainability of debt-fuelled growth and a speech by President Xi Jinping urging government agencies to accelerate “supply-side structural reforms”, the centrepiece of Xiconomics.
The State Council said some of the problem state enterprises had “weak core businesses, redundant workers, inefficiencies, excessive layers of management, and too many subsidiaries”. The government would promote a “weight loss and fitness” plan for such businesses to trim costs and boost profits, according to the statement.
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It said internal reporting layers at the biggest firms under the central government’s control should shrink to three or four, from the existing five to nine, to flatten the overly hierarchal structure at most state businesses. The structure of state firms often mirrors the 13-layer bureaucracy of the Communist Party.
